Legal Basis: 6306 Law Article 7/9 | Implementation Regulation Article 16/12

One of the biggest surprises a right holder entering the urban transformation process encounters is learning later that a large portion of tax and fee burdens, amounting to thousands of liras, should not have been paid at all. Title deed fee, stamp duty, notary fee, municipal fees, inheritance tax, bank transaction tax… Nearly all of these are covered by full exemption in transformation processes under Law No. 6306. More importantly, if you paid unknowingly, you have the right to claim a refund within five years. This article, within the framework of Article 7/9 of Law No. 6306 and Article 16/12 of the Implementation Regulation, addresses the full list of taxes and fees not applied in urban transformation, who can benefit from the exemption, which transactions are excluded, and how you can get a refund if you paid them, based on current 2026 legal provisions and court decisions. (Law Art. 7/9 — Reg. Art. 16/12)

Legal Framework: Legal Source of Exemption

Article 7, Paragraph 9 of Law No. 6306 constitutes the main source of the exemption. Article 16/12 of the Regulation also concretizes this exemption by explicitly listing which tax and fee items are covered. (L. Art. 7/9 — R. Art. 16/12)

The essence of the law article is as follows: Transactions, contracts, transfers, and registrations, as well as applications made pursuant to this Law, are exempt from notary fees, land registry fees, fees collected by municipalities, stamp tax, inheritance and transfer tax, revolving fund fees, and other fees. Monies to be collected in favor of granted loans are exempt from Banking and Insurance Transactions Tax. (L. Art. 7/9)

The Law has not limited this exemption to merely a narrow set of transactions. Both pre-transformation —the sale, transfer, registration, and establishment of a mortgage on the immovable before its demolition— and post-transformation —the first sale, transfer, and registration of the new structure to owners, contractors, and eligible tenants— are under this exemption umbrella.

Exemption List: Unpaid Taxes and Fees

The full list of exemptions stipulated by the Law and Regulation is as follows. Each item on this list remains valid from the date the risky building annotation is registered in the land registry, throughout the transformation process, and at all stages, including the first sale of the new structure. (L. Art. 7/9 — R. Art. 16/12)

1. Notary Fees (Law on Fees No. 492, Art. 38)

The construction contract in return for land share to be signed with the contractor, the preliminary real estate sales contract, and all other contracts during the transformation process are exempt from notary fees. Under normal circumstances, notary fees vary between four and eight per thousand of the contract value; for large projects, this amount can reach tens or even hundreds of thousands of liras.

2. Land Registry and Cadastre Fees (Law No. 492 on Fees, Article 57)

Under normal circumstances, for every land deed transfer transaction, a fee of twenty per thousand is collected separately from the buyer and seller; totaling four percent of the purchase-sale price. In transactions within the scope of urban transformation, this fee is zero. The exemption covers both transfer and registration transactions before transformation and the first sale and registration of the new building.

3. Municipal Fees (Municipal Revenues Law No. 2464, Articles 79, 80, 84, and Additional Article 1)

Fee items collected by the municipality benefit from a comprehensive exemption. This exemption includes; zoning status certificate fee, construction permit fee, occupancy permit (iskan) fee, road participation fee, sewage participation fee, and parking fee. The municipal fees exemption is valid for new construction areas up to 1.5 times the existing construction area; for areas exceeding this ratio, municipal fees are paid normally.

4. Stamp Duty (Stamp Duty Law No. 488)

The stamp duty exemption collected on contracts, undertakings, declarations, and documents submitted to official authorities is valid from the beginning to the end of the process. All documents, from construction contracts in return for land share to construction permit applications, and from construction contracts to land deed transfer transactions, benefit from this exemption.

However, an important limitation should be noted: as clarified by the decisions of the Council of State and tax courts, documents arising from progress payments made by the contractor to subcontractors cannot be considered within the scope of stamp duty exemption; the exemption applies directly to documents related to transactions covered by the Law. (Art. 7/9 of the Law)

5. Inheritance and Transfer Tax (Law No. 7338)

An inheritance and transfer tax exemption is applied under certain conditions when properties subject to urban transformation are transferred to heirs. This exemption becomes particularly important if the owner passes away during the transformation process and the heirs continue the process.

6. Bank and Insurance Transactions Tax — BSMV (Expenditure Taxes Law No. 6802)

Exemption from BSMV calculated on moneys received by banks in their favor — i.e., interest income — due to loans extended within the scope of urban transformation, provides a significant indirect cost advantage to the beneficiary. Normally, this tax, which banks pay on loan interest, increases the effective cost of the loan when passed on to the customer. Thanks to this exemption, urban transformation loans can be utilized at a lower real cost. (Art. 7/9 of the Law)

7. Revolving Fund Fees and Other Fees

Revolving fund fees charged by land registry offices, cadastre offices, and relevant public institutions, as well as all types of fees determined by municipal council decisions, are also covered by the exemption. Unknowingly paying these items is a common occurrence, especially in land registry transactions.

VAT: Not Exemption, but a Reduced Rate

VAT should be evaluated under a different status than the list above. VAT exemption is not applicable; however, a reduced rate is applied. In housing projects within the scope of urban transformation, for the first sale of new constructions, the VAT rate is one percent for residences with a net usable area of 150 m² and below. The application of one percent instead of the twenty percent rate normally applicable means a difference of up to 950,000 TL for a residence valued at 5,000,000 TL. To benefit from this advantage, the project must be an approved urban transformation project, and the 150 m² net area limit must not be exceeded. For residences with a net usable area exceeding 150 m², the VAT rate reverts to the general rate (twenty percent). (VAT Law Provisional Art. 28)

Who Can Benefit from the Exemption?

The exemption is not limited to owners only. Within the scope of Article 16/12 of the Regulation, the following individuals can benefit from the exemption: (Law Art. 7/9 — Reg. Art. 16/12)

Property owners, i.e., owners of independent sections registered in the title deed. Contractors undertaking the work benefit from the exemption both in the contracts they sign with land owners and during the construction permit, building inspection, and occupancy permit processes, as well as during the first sale of the independent sections allocated to them. Tenants who have occupied the risky structure for at least one year; it is explicitly stipulated that these individuals also benefit from the exemption during the first sale of the new construction to them. Holders of limited real rights are also among these individuals. In addition to real persons, private law legal entities — including companies — can also benefit from this exemption.

Which Transactions Are Covered by the Exemption?

The exemption covers two main categories of transactions. (Art. 7/9)

The first category consists of pre-transformation transactions: the first sale, transfer, registration, and establishment of a mortgage on immovable properties before they undergo transformation. This includes all types of transfer transactions carried out after a risky structure annotation has been made.

The second category consists of post-transformation transactions: the first sale, transfer, registration, and establishment of a mortgage on the new structure to owners, contractors, and eligible tenants. Second and subsequent sales are outside this scope; the exemption is only valid for the “first sale”.

The Concept of “First Sale”: The Most Critical Limit of the Exemption

The most debated aspect of the exemption is the interpretation of the concept of “first sale”. Judicial precedents and Ministry practices have clarified this concept as follows: First sale is the transaction where the pre-transformation owner or eligible tenant first transfers that independent section after the new structure is completed. The sale by the contractor of the independent sections falling to their share to a third-party buyer is also within the scope of the exemption, as it constitutes the first sale of the contractor’s share. Conversely, a second sale made by the rights holder — that is, the second-hand transfer of the apartment in the new structure — cannot be considered within the scope of the exemption.

An important detail: The exemption covers not only the owners of the directly risky structures but also the owners of structures relocated to a different parcel. In cases where relocation to a different parcel occurs due to implementation, all tax and fee exemptions provided by Law No. 6306 are preserved. (Reg. Art. 16/12)

If You Paid, You Can Get a Refund: 5-Year Right to Refund

In practice, it is observed that some land registry directorates, municipal units, and notary offices continue to collect taxes and fees despite the right to exemption. This situation constitutes a taxation error under the Tax Procedure Law and can be corrected through a refund.

The statute of limitations for the right to a refund is five years. A refund claim can be made within five years from the beginning of the year following the calendar year in which the tax receivable arose. (Tax Procedure Law No. 213, Article 114)

Refund applications can be made by the following persons: Owners who made payments within the scope of transformation; property owners who gave their land to a contractor under a revenue-sharing construction contract; eligible tenants, and contractors.

The refund process follows these steps: A written application is made to the institution where the incorrect collection was made — the land registry directorate, municipality, or tax office; documents showing that the building is within the scope of Law 6306 — risky building detection report, land registry annotation document, and Directorate letter — are attached to the application; if the administration rejects the application, an annulment and refund lawsuit can be filed in the administrative court. Tax court decisions in Istanbul have ruled for the refund of unjustly collected fees, and these decisions have also been upheld at the appeal stage. (Istanbul Regional Administrative Court, 5th Tax Litigation Department, E. 2017/1845 K. 2017/2078)

Is Exemption Valid for Structures Contrary to Zoning Regulations?

Yes. The Law provides a clear assurance on this matter: Regardless of whether existing structures in the implementation area comply with zoning regulations, tax, fee, and charge exemptions apply. (Law Art. 7/9 — Reg. Art. 16/12)

This regulation means that illegal or unlicensed structures can also benefit from tax advantages during the transformation process. The state prioritizes the purpose of transformation, not the legal status of the existing structure.

Transactions Outside the Scope of Exemption

The exemption is not valid for every transaction. Transactions not directly related to the conversion are excluded. Limitations that should especially be noted are: (Law Art. 7/9)

Progress payments made by the contractor to its own subcontractors are outside the scope of stamp duty exemption. The Council of State has clarified this issue: The exemption applies to documents directly related to transactions covered by the Law; not to documents based on subcontractor relationships of the construction.

Second-hand sales of apartments in the new building, i.e., transfers made after the initial sale, are outside the scope of exemption.

The exemption for municipal fees partially loses its validity for new construction areas exceeding 1.5 times the existing construction area.

It is not a VAT exemption, but only the application of a reduced rate; VAT has not been completely abolished. When the net area exceeds 150 m², the normal rate of twenty percent comes into effect.

Financial Value of the Exemption: Concrete Calculation

To understand the true value of tax exemptions, it is illuminating to perform a calculation using a concrete example.

Let the value of an apartment under scope 6306 in Istanbul be 5,000,000 TL. The taxes and fees to be paid under normal circumstances are as follows: Title deed fee (buyer + seller four percent) 200,000 TL, notary fees approximately 20,000–40,000 TL, stamp duty based on the contract value approximately 5,000–10,000 TL, municipality and construction permit fees approximately 30,000–80,000 TL, VAT difference, if twenty percent is applied instead of one percent for residences under 150 m², is 950,000 TL. Even when only these items are added up, the total difference remaining in the right-holder’s pocket thanks to the tax exemption can easily exceed 1,200,000 TL. (Law Art. 7/9 — Reg. Art. 16/12)

Practical Tips

You must request the exemption yourself. The land registry office, municipality, or notary may not automatically apply the exemption. During the transaction, clearly state that the building is within the scope of 6306 and that the transaction is being performed under the exemption. For this, keep the risky building detection report and the Directorate’s letter with you.

Be careful not to exceed the 1.5 times limit for municipal fees. If the construction area of the new building exceeds 1.5 times the existing construction area, municipal fees will be paid for the exceeding portion. This limit should be taken into account during project planning.

Follow the 150 m² net area rule for VAT in practice. Pay particular attention to ensuring that the net usable area does not exceed 150 m²; if exceeded, the twenty percent VAT rate will apply, and the tax burden will increase dramatically.

Don’t miss the five-year refund right. For taxes and fees unjustly collected in the past, a refund application can be made within the five-year statute of limitations period. Keep payment dates and documents.

Be aware that there is no exemption for second sales. When you want to sell your new apartment, the second sale is subject to the normal tax burden; the exemption is only valid for the first sale.

Why is Expert Lawyer Support Necessary?

Although tax and fee exemptions may seem clear on paper, in practice, many public institutions do not automatically recognize these exemptions or interpret them narrowly. As 2M Law Firm, the most common scenario we encounter during the urban transformation consultancy services we provide across Istanbul, especially in Tuzla, is this: Rights holders pay land registry fees, notary fees, and municipal fees without knowing their right to exemption; and furthermore, they miss the five-year period without being aware that these can be refunded.

Much more effective results are obtained when the process of which documents to submit, what correspondence to make, and how to use the objection path if the exemption is rejected, to ensure the exemption is applied from the outset by the land registry office, notary, and municipality, is managed by an urban transformation lawyer. (Law Art. 7/9 — Reg. Art. 16/12)

The application process for the refund of unjustly collected fees and the tax lawsuit to be filed if the refund is rejected also require separate expertise. As an Istanbul urban transformation lawyer, we are by your side both in managing applications with the administration and in court proceedings at tax courts.

Regulating on whose behalf and how the exemption will be requested in contracts is also a critical detail. Failure to include a clause in the contractor’s agreement clearly stating whether the exemption will be utilized by the contractor or the owner can lead to serious disputes later on. Within the scope of urban transformation consultancy, we also offer such contract reviews. 2M Hukuk Avukatlık Ofisi, serving as a Tuzla lawyer, is by your side throughout every stage of urban transformation across Istanbul.

Conclusion

Within the scope of Article 7/9 of Law No. 6306 and Article 16/12 of the Implementation Regulation, notary fees, land registry and cadastral fees, municipal fees, stamp duty, inheritance and transfer tax, revolving fund fees, and Banking and Insurance Transactions Tax applied to loan interest benefit from full exemption during the urban transformation process. This exemption covers both pre-transformation and post-transformation first sales; in addition to owners, contractors and those who have been tenants for at least one year can also benefit. If this exemption, which is valid for all structures within the scope of Law No. 6306, including those contrary to zoning regulations, is paid unknowingly, the right to a refund within five years is reserved. (Law Art. 7/9 — Reg. Art. 16/12)

This article has been prepared based on Law No. 6306 (Art. 7/9) and the Implementation Regulation (Art. 16/12), judicial decisions, and current open sources as of April 2026. Since exemption conditions and VAT rates may vary according to legislative changes, it is recommended to confirm the current legislation before any transaction.